Mexican Stocks Pass Breakout Test With Flying Colors
The Mexican stock market tested its July breakout to all-time highs – with resounding success.
We’ve mentioned a number of markets over the past few weeks that were testing key levels within the context of the mini-selloff. Most of them pertained to trendlines and, following Wednesday’s Fed meeting, most of the tests were successful. Today’s Chart Of The Day dealt with a test of a different level. In July, we mentioned that after threatening for 3 years, the main Mexican IPC Stock Index was at long last breaking out to new all-time highs (of course, priced in Pesos). Following a brief and successful test of that breakout level in early August, the IPC resumed its post-breakout foray to new highs. Over the past month, the index has retreated to again test the breakout level. It has passed that test so far – with flying colors.
Witness this week’s reaction of the IPC upon testing the former highs of the past 3.5 years.
On this close-up chart, it is easier to see the explosive reaction to the breakout test.
After the IPC’s month-long pullback bottomed a week ago, the index leapt some 5% this week, so far. What you want to see in a breakout is follow-through, which the IPC demonstrated in July-August. And upon a test of the breakout point, you want to see an explosive reaction back to the upside. This is a textbook example of just that.
This does not guarantee Mexican stocks will continue their ascent into all-time high ground. However, along with the 3 and a half year consolidation at the highs, this resounding response to the breakout level would seem to bode very well for the Mexican market
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The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
